What Belongings can I Keep if I File Chapter 7 Bankruptcy in Ohio?

Chapter 7 is the most widely filed form of bankruptcy in the United States today. This type of bankruptcy discharges unsecured debt such as for credit cards. It's available to individuals who do not earn enough income to pay creditors. Here are important things to know about filing Chapter 7 in Ohio and what it allows you to keep.

Understanding Bankruptcy Exemptions

One of the main reasons people have reservations about filing Chapter 7 is that it requires liquidating assets to help pay creditors. However, it's possible to maintain ownership of certain assets through federal and state bankruptcy exemptions. These exemptions protect your assets up to a certain amount such as for your home, car, furniture, and home appliances.

The Homestead Exemption protects your home for up to $161,375 of its equity. You can double this amount if you and your spouse own the property jointly. Ohio also provides an exemption to protect $1,475 to cover any type of property you own, except real estate.

Your vehicle is protected for up to $4,450 in equity. Your personal cash is protected up to $550, regardless of if it's in paper or digital form. Exemptions also protect your retirement funds up to 100% held in an IRA or 401(k) plan.

Maintaining Home and Car Payments

To keep a home funded by a mortgage loan or a vehicle funded by an auto loan, you need to maintain monthly payments. First you should determine if you are able to afford keeping up with these payments. In some cases, such as when a car is worth less than the amount owed, it's beneficial to give up the vehicle and plan for using alternative transportation.

What About Tax Refunds?

Tax refunds may be added to your bankruptcy estate or saved depending on which tax year you file for bankruptcy. For the tax year prior to your bankruptcy filing, your refund will be part of your estate to help pay debts. The refund you receive, however, during the year you file Chapter 7 is based on earned income after your bankruptcy filing, so you may keep this amount. The refund for the tax year after filing bankruptcy is also yours to keep.

Conclusion

The good news about filing bankruptcy is that inmost cases, it's possible to keep your home, car, and other important belongings. There are various bankruptcy exemptions and options to consider when you are unable to repay debts in Ohio. Talk with a financial expert to learn more about how you can benefit from or avoid filing Chapter 7.

If you are considering seeking guidance through a financial hardship, our team at Wood & Brewer LLC are here to help. We have decades of experience serving out clients and invite you to call us today to set up your free consultation.